Future forecast: Why law firms should pay attention to futurology

The chancellor of the exchequer, George Osborne, says that Britain’s economy is out of intensive care and on the road to recovery. Is this merely further political hype or are we really headed toward the much-dreamed-about turnaround? And, are our businesses ready for this brave new world?

What have we learned since the collapse of Lehman Brothers? Which of us has used the recession to question past poor practices, plan for the future and respond to the complex challenges of shifting client and global demand patterns?

Many firms have merely ridden the stormy waters – they may have done well enough to keep afloat until now, but they have not challenged enough practices and behaviours to effect a real change in the way they operate to make them strong and fit enough for the future.

Forecasting issues

In the late 1980s I worked for a global law firm on a project with the perhaps pretentious (although I think wholly forward-thinking) title of ‘office of the year 2000’. We were trying to imagine how technology changes would impact working practices over the following decade and how professional services firms would need to embrace those advances and respond effectively. This was at a time when the DOS green flashing line was what appeared on a computer screen and windows were panes of glass out of which one looked.

To that global player, being on the strategic frontier was vital. Getting it right mattered and kept us awake at night. Our predictions were 99 per cent accurate, except for one thing: we had not envisioned the impact of the internet on the way we would live and do business.

In the early to mid-2000s, who among us predicted the impending global financial crisis or, if we had, did any of us use the ‘good times’ to carry out detailed and effective scenario planning analyses to prepare our businesses for a range of possible catastrophic situations?

And, if we hadn’t factored this into our thinking, when the crash did happen, which steps did we take to try to picture the future? Did we spend any structured time trying to imagine the likely depth and length of this seismic shift in the economy and how it would impact the world in general or us in particular? Or did we simply move into survival mode and do all that we could merely to stay afloat?

Just because we’re not all blessed with 20/20 crystal ball vision doesn’t mean that we shouldn’t try to plan for the future. We all need to employ our multiple senses to monitor this changing world and attempt to understand which factors are going to impact client needs, demand for our services and access to key resources.

We won’t always get it right. In fact, most of us won’t get anywhere near to forecasting the future accurately. But, if we’re not in the habit of confronting the status quo – of assessing the future and its possible impact on us – then we’re not even in with a fighting chance.

As a consultant recently said, if the rate of change within our organisation doesn’t at least match that in the world around us, we will in no short measure fall behind. And that should keep us awake ?at night.

We have no option but to do ?two things:

1. make sure our businesses are ideally placed (both inwardly and externally) based on the world as we know it ?now; and

2. do our best to look into the future to understand how things might be.

In reality, we cannot ignore either. How well we achieve these goals is really a question of how far out of our firm’s comfort zone we’re prepared to venture.

Let’s explore a few of these challenges. And in so doing, we should ask ourselves: how have we engaged with these issues to date? As business leaders, we don’t have the luxury of suggesting that it’s someone else’s problem. Quite the contrary: this falls squarely within our remit.

I’ve divided these topics into current and future issues. To my mind, they’re all ‘now’ issues, but our time isn’t infinitely elastic and we have no choice but to prioritise. We’ll all draw the line differently between ‘now’ and ‘future’ and we’ll all have conflicting views as to which issues should and shouldn’t be on the list. The issues that I have listed below are only ?a small taster.

This is definitely not a one-size-fits-all activity; the idea is to engage with some or all of these issues. We should use this as a mechanism to expand our thinking, add items to our personal lists and, most importantly, carefully and thoughtfully consider the consequences of not taking the necessary actions to build resilience and strength.

Current issues

When Dewey & LeBoeuf’s financial problems unfolded, many commented that the firm had been spectacularly mismanaged. Whether or not this was the case, it doesn’t take spectacular mismanagement to bring a firm down. It just takes a failure to recognise that professional service practices – regardless of their size – need to be run like modern businesses.

Certainly there are unique and cherished elements of partnerships that can and should be preserved – a sense of support, collegiality, family and synergy, for example. But the underlying business is just like any other and needs to be run as such with effective decision making, unencumbered by the distraction of too much involvement in choosing the ?toilet tissue.

So, where are we all in dealing with the following issues?

• Financial hygiene. Is time being converted into bills and cash as effectively as it ought to be? You wouldn’t have your plumber fit a new bathroom without having agreed a price upfront or paying him for the job when it was finished; you almost certainly would pay his outgoings (read disbursements) before he incurred them. And you wouldn’t go into your local supermarket and walk out without paying for your groceries or ask for your fresh loaf of bread to be discounted by 20 per cent. Why is it okay for our lawyers to shy away from client conversations about basic financial matters??

• Supervision. Are we really supervising our lawyers as effectively as we ought to? For as long as I can remember, accounting firms have had highly structured layers of review and control at all levels. Lawyers have for too long believed that such processes stunt creativity, flexibility and responsiveness. This is as an invitation for trouble and ?a professional indemnity disaster in ?the making.?

• Effective client listening and engagement. While we all focus ?on accessing new markets and sources of revenues, are we doing all that we should in listening to and engaging with our existing clients to hold onto them??

• Information, expertise, relationships and commoditisation. We’re all subject to being replaced by a database if all we have is content. But you cannot outsource relationships. Our place in the world cannot be guaranteed by expertise alone – at best it’s a necessary, but not a sufficient condition. How thoroughly do we assess our work products and the strength of our relationships??

• Revenue portability. Are our clients true clients of the firm, not portable commodities that come and go with a changing workforce??

• Strategy and differentiation. Does the market truly know who we are and what we stand for? What differentiates your firm from the crowd? Why would a potential client choose your firm over any other firm? Is everyone in the practice singing from the same corporate hymn sheet??

• Diverse workforces. Have we embraced the needs of the changing workforce and are we actually building diversity? When was the last time we looked at the make-up of our senior management teams to see if they reflect societal trends? Do we offer flexible working arrangements to tap into non-traditional styles of working??
  Succession planning. Are the right people coming through and is there a transparent path to the top??

• Remuneration. Do our remuneration models motivate and reward desired behaviours??

• Values. Have we articulated our firms’ values and does everyone know what they are and buy into them? What are the consequences of non-compliance? Remember that every failure to stamp out non-conformance with those values is another step toward permanently undermining the essence of what made the firm special in the first place.

Future issues

Thinking about the future is difficult for most of us. Thankfully, we don’t have to do all of the star-gazing ourselves. Others have already done the lion’s share of the work for us – Richard Susskind, Rohit Talwar, Bruce MacEwen and Thomas Friedman, to name but a few.

These futurists have helped to identify some of the issues that are coming up. Our task is to think about how our businesses might be impacted (if at all) and what our responses ought to be. The following are some of the issues of the future that keep me awake at night trying to fathom if our business will be impacted, how that will occur and in what timescale.

• Careers. With cuts to the government’s social security spend, the NHS in disarray and many of our pension pots insufficient to fund our retirement, expectations with which we may have grown up are being undermined on a daily basis. How will we accommodate a workforce needing to retire later but possibly not having the mental or physical capacity to keep going? What will society look like in five or ten years’ time and what, if anything, can we do about this??

• Technologies. Do we understand the impact of the green/sustainability focus, how biotechnology impacts our lives and how the rate of technological change has rendered much of our thinking obsolete??

• Geographies. Where are the new economies, which countries will be on the rise and in decline, and are we correctly placed to respond appropriately? Do we have the international and cultural sensitivities and capacity to engage with prospective clients from these jurisdictions? ?

• Social media. Social media’s deep tentacles mean that large swathes of people can be contacted – whether for the good or otherwise – with an immediacy whose ongoing effect on opinion forming and decision making is profound. Have you figured out what this means for your business??

• Shifting political landscapes and changing societal attitudes. In which direction is society headed? What was unthinkable a few years ago may be entrenched in law tomorrow. What previously might have been acceptable tax planning has the masses up in arms today. Where inclusivism once opened geographic borders, jealousies and prejudices may one day close them.?

• Digital currencies. What do we know about digital currencies like bitcoin and how will the changing face of ecommerce impact the way that we deliver our services?

Creating a plan

How much of the above is a threat or an opportunity depends on our individual perspective and willingness to embrace or, at the very least, acknowledge change.

We don’t know how much time we have left before we’re forced to make vital, deep seated and essential underlying changes. I’d rather not wait until these changes are imposed on our businesses; I’d prefer to devote serious energy to addressing these issues right now. If not now, then when?

Mark Dembovsky is CEO at UK law firm HowardKennedyFsi ?(www.howardkennedyfsi.com)